Notes to Accounts of Chemfab Alkalies Ltd.

Mar 31, 2015

(A) Disclosure of Rights

The Company has issued only one class of equity shares having a par
value of Rs.5 per share. Each holder of Equity Share is entitled to one
vote per share. The Company declares dividends in Indian rupees.
Dividend when proposed by the Board of Directors is subject to the
approval of the shareholders at the Annual General Meeting, except in
the case of interim dividend, if any.

In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company. The
distribution will be in proportion to the number of equity shares held
by the shareholders.

b. Contingent liabilities in respect of

(i) Guarantees given by the Company
to the Customs Department on behalf
of Titanium Equipment and Anode
Manufacturing Company Limited (Refer Note 47) 1,15,00,000 80,00,000

(ii) Outstanding letters of credit 2,23,08,367 2,26,54,655

(iii) Sales tax, Excise, Service
Tax and other demands against
which the Company has filed appeals
and for which no
provision is considered required as
the Company is hopeful
of successful outcome in the appeals. 35,31,107 2,41,52,812

Notes:

(i) The amounts shown above represent best possible estimate carried on
the basis of the available information. The uncertainties and possible
reimbursement are dependent on the outcome of the various case
proceedings which have been initiated by the Company or the claimants,
as the case may be, and therefore cannot be predicted accurately.

(ii) Figures in bracket indicate previous year figures.

2. Income Tax Demands

A. Orders Relating To Financial Year 2011-12 and 2012-13

During the year, the Company received orders from the Income Tax
Department for the financial years 2011-12 and 2012-13 primarily
disallowing a portion of the Sales Commission expenditure aggregating
Rs. 53,40,174/- and Rs. 39,13,140/- respectively. The tax demanded on
account of the disallowances are Rs. 19,32,743/- and Rs. 18,42,597/-
for the financial years 2011-12 and 2012-13 respectively. The aforesaid
disallowance was made on technical grounds in the absence of
confirmation letters from some commission agents. The Management duly
considering the order received on the similar matter in the earlier
years, the amounts involved and the significant time /cost involved in
continuing to litigate this matter has decided not to prefer any
further appeals and has paid and accounted for the tax demand as a
charge in the financial statements for the year ended 31 March 2015.
Also refer Note 34 below.

B. Appellate Order relating to the Financial Year 2009-10

During the year, the Income Tax Department has appealed before the
Income Tax Appellate Tribunal (ITAT) against the Order passed by the
Commissioner of Income Tax (Appeals) for the Assessment Year 2010-11
relating to the disallowance of sales commission paid to various
commission agents. The Company has filed its cross objections
challenging the Department''s contentions and it is hopeful of a
favorable outcome. The amount involved in this appeal is estimated at
Rs. 1,34,53,017. Based on professional advice obtained in the matter,
the Company is hopeful of a favorable outcome in the Appeal. (Also
refer Note 34 below).

C. The Income Tax Department has issued show cause notice for the
financial years 2005-06 to 2012-13 for initiating penal proceedings
under section 271(1)(c). The Company has requested the department to
drop the penal proceedings which is pending disposal. The Company is
hopeful of a favorable outcome.

31. The National Green Tribunal, in an appeal filed by a party, granted
an ex parte stay, restraining the construction activities pertaining to
the expansion and operation of the Plant without valid consent order.
The Company strongly objected the averments of the complainant and
filed its counter for vacating the stay which was granted. Further, the
Company''s petition seeking directions to the authorities concerned
for the grant of Consent to Establish (NOC) for the expansion is also
pending before the Hon''ble Forum.

3. Power and fuel for the year ended 31 March 2015 includes charge
towards the Fuel and Power Purchase Cost Adjustment (FPPCA) amounting
to Rs 94,47,120/- (net of provision no longer written back during the
year Rs. 1,53,42,129 (P.Y - Nil)). FPPCA charge for the year includes
a provision of Rs. 2,15,12,205/- determined by the management pending
receipt of demand notices. Further, the Company has filed a joint
appeal along with certain other applicants against the increase in
power tariff fixed by the Electricity Department, Puducherry, with
effect from 1 April 2013, which is pending disposal.

4. The Company had given Inter Corporate deposits (ICD) to Teamec
Chlorates Limited (TCL), at their request to meet their working capital
requirements. The principal amount outstanding on account of these ICDs
as at 31 March 2015 is Rs. 14,70,45,171 (As at 31 March 2014 Rs.
12,00,00,000) which also includes an amount of Rs. 2,70,45,171 that has
been converted into ICD during the year from the balance of Trade
/Other Receivables outstanding from TCL.

Further, due to various developments, TCL could not repay an amount of
Rs 2,00,00,000 which became due for repayment on 8 February 2015 as per
the original terms of sanction of the ICD and requested for an
extension. Hence, at the request of TCL, the Board of Directors, duly
considering professional advice, extended the tenure of the ICD to
February 2017. Whilst the net worth of TCL has been fully eroded as
per the latest audited financial statements and during the year it has
made an application to the Board for Industrial and Financial
Reconstruction (BIFR), the Management of the Company, based on the
discussions with TCL and considering certain other developments
believes that no provisioning is required to be made for the
outstanding ICDs as at this stage.

5. Provision for current tax for the year has been determined based on
the total income of the Company for the year ended 31 March 2015 and in
accordance with the Income Tax Act, 1961, duly considering the
deduction / exemption proposed to be claimed by the Company in the
Return of Income. The tax charge for the current year amounting to Rs.
3,22,23,442/- (P.Y Rs. 7,36,10,767/-) includes a net adjustment of Rs.
2,13,817/- (P.Y. Rs. 77,89,233/-) towards prior periods based on the
reassessment of tax claims made in the past with respect to various
matters considering the developments including completion of tax
assessments. Also refer Note 30 above.

6. Cash Credit facilities are secured by exclusive first charge on all
current assets of the Company, exclusive first equitable mortgage of
factory land and building, second charge on the fixed assets of the
Company and pledge of other assets of the Company. The Company has not
utilised these Cash Credit facilities during the current period and in
the previous year.

7. As on 31 March 2015, based on and to the extent of information
available with the Company regarding registration of suppliers as
Micro, Small and Medium Enterprises under the Micro, Small and Medium
Enterprises Development Act, 2006, there are no amounts outstanding in
respect of these vendors.

During the year, pursuant to the notification of Schedule II to the
Companies Act, 2013 with effect from April 1, 2014, the Company has
revised the estimated useful life of its assets to align the useful
life with those specified in Schedule II except for Continuous Process
Plant (CPP) assets in whose case the life of the assets has been
assessed as 17.99 years based on technical advice, taking into account
the nature of the asset, the estimated usage of the asset, the
operating conditions of the asset, past history of replacement,
anticipated technological changes, manufacturers warranties and
maintenance support, etc.

Further, any part or components of fixed assets which are separately
identifiable and expected to have a useful life which is different from
that of the main assets are capitalized and depreciated separately,
based on the technical assessment of the Management.

Further, assets individually costing Rs. 5,000/- or less that were
depreciated fully in the year of purchase are now depreciated based on
the useful life considered by the Company for the respective category
of assets. The details of previously applied depreciation rates /
useful life are as follows:

Pursuant to the transition provisions prescribed in Schedule II to the
Companies Act, 2013, the Company has adjusted an amount of Rs.
39,22,639/- (net of deferred tax of Rs. 20,19,857/-) against the
opening Surplus balance in the Statement of Profit and Loss under
Reserves and Surplus where the remaining useful life of the asset was
determined to be Nil as on April 1, 2014.

The depreciation expense in the Statement of Profit and Loss for the
year is higher by Rs. 92,78,283/- consequent to the change in the
useful life of the assets in compliance with the Schedule II to the
Companies Act, 2013. Also refer Note 11 (2).

9. Employee benefit plans

I. Defined contribution plans

a. The Company makes Provident Fund, Superannuation Fund and Employee
State Insurance Scheme contributions which are defined contribution
plans, for qualifying employees. Under the Schemes, the Company is
required to contribute a specified percentage of the payroll costs to
fund the benefits. The Company recognised Rs. 54,93,334(Year ended 31
March, 2014 Rs. 51,18,636) for Provident Fund contributions, Rs.
13,58,936 (Year ended 31 March, 2014 Rs. 13,39,212) for Superannuation
Fund contributions, Rs. 2,39,034 (Year ended 31 March, 2014 Rs.
2,43,430) for Employee State Insurance Scheme contributions and Rs
2,69,201 (Year ended 31 March, 2014 Rs 2,80,626) for Employee Deposit
Linked Insurance Scheme in the Statement of Profit and Loss. The
contributions payable to these plans by the Company are at rates
specified in the rules of the schemes.

Defined benefit plans

b. The Company offers the following employee benefit schemes to its
employees:

i. Gratuity (included as part of (Contribution to Provident and other
Funds) in Note 26 Employee benefits expense)

The following table sets out the funded status of the defined benefit
schemes and the amount recognised in the financial statements.

10. Segment Information

The Company has identified business segments as its primary segment and
geographical segments as its secondary segment.

a) Primary segment:

Effective 1 April 2014, the Company has reviewed its business oversight
mechanism and has realigned all its operations under single business
segment (i.e.) "Dealing with Chlor Alkali and Related Products /
Services", based on the assessment of the overall risks and rewards.

The Company has taken on lease certain vehicles during the prior years
under non-cancellable operating lease agreements. There were no
non-cancellable operating lease arrangements as at 31 March 2015. The
rental expense under such operating leases was Rs. Nil /- (Previous
Year Rs. 38,02,355/-).

12. Subsequent to the resignation of the Company Secretary with effect
from 14 November 2014, the Company is in the process of appointing a
qualified Whole-time Company Secretary as stipulated under the
Companies Act 2013.

13. Previous year figures have been regrouped or reclassified wherever
necessary to conform to current year''s classification.

14. The Board of Directors has reviewed the realisable value of all
current assets of the Company and has confirmed that the value of such
assets in the ordinary course of business will not be less than the
value at which these are recognised in the financial statements. In
addition, the Board has also confirmed the carrying value of the
non-current assets in the financial statements. The Board, duly taking
into account all the relevant disclosures made, has approved these
financial statements in its meeting held on 27 April 2015.

Mar 31, 2014

1. Amount in Rs.

Particulars As at 31 March
2014 As at 31 March
2013

a. Commitments

(i) Estimated amount of contracts
remaining to be executed and not
provided for in these accounts
(net of advances) in respect of
purchase of :

- Tangible assets 20.48,31,068 47,57.63,871

- Intangible assets 24,36.000 -

b. Contingent liabilities in respect
of

(i) Guarantees given by the
Company to the Customs department
on behalf of Titanium Equipment and
Anode Manufacturing Company Limited
(Refer Note 45) 80,00,000 75,00,000

(ii) Outstanding letters of credit 2,26,54,655 24,88,41,400

(iii) Income Tax, Sales tax ,Excise,
Service Tax and other demands
against which the Company has
challenged / filed appeals and 2,41.52,812 2,01,77,809
for which no provision is considered
required as the Company is hopeful
of successful outcome in the appeals.

2. Income Tax Demands

A. Orders Relating To Financial Year from 2005-06 to 2008-09 and
2010-11 received during the Financial Year 2013-14

During the year, the Company received orders from the Income Tax
Department disallowing a portion of the Sales Commission expenditure
aggregating Rs. 1,73,26,736 /- for the Financial Years from 2005-06 to
2008-09 and 2010-11 resulting in a total additional tax demand of
Rs.64,17,086/- on this account for the said years. The aforesaid
disallowance was made on technical grounds in the absence of
confirmation letters from some commission agents. The Management, duly
considering the legal opinion obtained, the amounts involved and the
significant time /cost involved in continuing to litigate this matter,
has decided not to prefer any further appeals and has paid and
accounted for the tax demand as a charge in the financial statements
for the year ended 31 March 2014. Also Refer Note 35 below.

B. Order relating to the Financial Year 2009-10 received during the
previous year 2012-13 which is under appeal

i. During the previous year 2012-13, the Company received an order from
the Income Tax Department for the Financial Year 2009-2010 challenging
and disallowing the claim of membrane as a deductible expenditure and
the incurrence of the Sales Commission expenditure.

ii. In the aforesaid assessment order, Sales Commission expenditure
amounting Rs.2,93,25,806/-was disallowed by the Department as not being
genuine on account of preponderance of probabilities. The Company
contends that these are genuine and valid transactions, and that the
total amount which was actually paid to the Commission agents for the
services rendered was Rs. 2,66,03,358/- and the balance amounts were
paid towards quantity and other discounts provided to customers. The
Company strongly believes that the disallowance has been incorrectly
made by the Department based on certain incorrect assumptions on the
method of working of the Commission agents and the question of
genuineness of the aforesaid sales commission expenditure incurred by
the Company is beyond doubt and such tax claims are not tenable.

iii. Accordingly, the Company has also filed an Appeal against this
order before the CIT (Appeals), Chennai and obtained a stay on the
demand. Subsequently, consequent to vacation of the stay the Company
has paid the entire amount demanded subject to the disposal of the
appeal filed.

iv. Considering the recent orders received during the current year on a
similar matter (Refer Note 31A above), based on legal advice obtained,
and by applying the principle of Res Judicata, the Management during
the current year, has provided for an amount of Rs. 4,12,792/- towards
the demand arising on account of sales commission for the Financial
Year 2009-10 on grounds of prudence. Hence, the net potential balance
Income Tax liability (including the relevant interest) of
Rs.1,34,53,017 on this account, is disclosed under "Contingent
Liabilities". (Also Refer Note 35 below).

C. The department has issued show cause notice for the aforesaid
financial years 2005-06 to 2010-11 for initiating penal proceedings
under section 271(l)(c). The Company has requested the department to
drop the penal proceedings which is pending disposal. The Company is
hopeful of a favorable outcome.

3. The National Green Tribunal, South Zone, in an appeal filed by a
party, granted an ex parte stay, restraining the construction
activities pertaining to the expansion and operation of the plant
without valid consent order. The Company strongly objects to the
averments of the complainant and had filed its counter for vacating the
stay which was granted subsequently. Further, the company''s petition
seeking directions to authorities concerned for the grant of Consent to
Establish (NOC) for the expansion is already pending before the Hon''ble
Forum. Based on the professional advice on the matter, the Company
expects favorable orders from the Tribunal.

4. Power and fuel for the year ended 31 March 2014 includes charge
towards the Fuel and Power Purchase Cost Adjustment (FPPCA) amounting
to Rs 3,29,41,013. The above includes a provision of Rs. 1,53,42,129/-
towards FPPCA for the periods for which demand is not yet received and
hence determined based on management assessment. Further, the Company
has filed a joint appeal along with certain other applicants against
the increase in power tariff fixed by the Electricity Department,
Puducherry, with effect from 1 April 2013, which is pending disposal.

5. The Company is implementing a project for improving the process
technology and modernizing the plant ("the project"), the completion of
which is in progress as at 31 March 2014 and is awaiting the required
regulatory clearances. The management is hopeful of obtaining the
required clearances and commissioning the project in the near future.
An amount of Rs. 56,44,73,667/- incurred on the project is included as
a part of Capital Work in Progress.

6. Provision for current tax for the year has been determined based on
the total income of the company for the year ended 31 March 2014 and in
accordance with the Income Tax Act, 1961, duly considering the
deduction / exemption proposed to be claimed by the Company in the
Return of Income. The tax charge for the current year amounting to Rs.
7,36,10,767/- (P.Y Rs. 12,11,88,900/-) includes a net adjustments of
Rs. 77,89,233/- (P.Y. Rs. 89,16,900/-) towards prior periods comprising
of Rs. 68,29,878/- for additional provision made by the management in
connection with the tax demands arising out of sales commission (Refer
Note 31 above) and the reversal of tax provisions amounting to Rs
1,46,19,111/- based on the reassessment of tax claims made in the past
with respect to various matters considering the developments including
completion of tax assessments.

7. Cash Credit facilities are secured by exclusive first charge on all
current assets of the Company, exclusive first equitable mortgage of
factory land and building, second charge on the fixed assets of the
Company and pledge of other assets of the Company. The Company has not
utilised these Cash Credit facilities during the current period and in
the previous year.

8. As on 31 March 2014, based on and to the extent of information
available with the Company regarding registration of suppliers as
Micro, Small and Medium Enterprises under the Micro, Small and Medium
Enterprises Development Act, 2006, there are no amounts outstanding in
respect of these vendors.

9. Employee Benefits

A. Denned Contribution Plans

a. The Company makes Provident Fund and Superannuation Fund
contributions which are defined contribution plans, for qualifying
employees. Under the Schemes, the Company is required to contribute a
specified percentage of the payroll costs to fund the benefits. The
Company recognised Rs. 47,15,051 (Year ended 31 March, 2013 - Rs
41,53,553) for Provident Fund contributions and Rs. 13,39,212 (Year
ended 31 March, 2013 Rs 11,69,537) for Superannuation Fund
contributions in the Statement of Profit and Loss. The contributions
payable to these plans by the Company are at rates specified in the
rules of the schemes.

10. Previous year figures have been regrouped or reclassified wherever
necessary to conform to current years classification.

11. In connection with the preparation of the financial statements,
the Board has confirmed the propriety of the contracts / agreements
entered into and the resultant income earned / expenses incurred and
the balance of assets and liabilities arising out of the same after
reviewing the levels of authorisation, the available documentary
evidences and the overall control environment. Further, the Board of
Directors has reviewed the realisable value of all current assets of
the Company and has confirmed that the value of such assets in the
ordinary course of business will not be less than the value at which
these are recognised in the financial statements. The Board, duly
taking into account all the relevant disclosures made, has approved
these financial statements in its meeting held on 11 April 2014.

Mar 31, 2013

(a) Disclosure of Rights

The Company has issued only one class of equity shares having a par
value of Rs.5 per share. Each holder of Equity share is entitled to one
vote per share. The Company declares dividends in Indian Rupees.
Divdend when proposed by the Board of Directors is subject to the
approval of the shareholders at the Annual General Meeting, except in
the Case of interim Dividend, if any.

In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company. The
distribution will be in proportion to the number of equity shares held
by the share holders.

(b)Authorised share capital includes 51,00,000 Equity Shares of Rs.
10/- each (P.Y 51,00,000 Equity Shares of Rs.10/- each) being
authorised share capital of Rs. 5,10,00,000 (P.Y Rs. 5,10,00,000/-) of
erstwhile Membrane Technologies Limited which stood combined with the
authorised share capital of the Company based on the Scheme of
Amalgamation approved by the Hon''ble High Court of Madras vide its
Order dated 8 March 2006.

Notes:

(i) The amounts shown above represent best possible estimate carried on
the basis of the available information. The uncertainities and possible
reimbursement are dependent on the outcome of the various case
proceedings which have been initiated by the Company or the claimants,
as the case may be, and therefore cannot be predicted accurately.

(ii) Figures in bracket indicate previous year figures.

1. Power and fuel includes charge towards the incremental fuel
surcharge levy by the Electricity Department, Puducherry, amounting to
Rs.4,94,51,407/- for the Year ended 31 March 2013 and also Rs.
1,98,81,149/- debited towards the Incremental Fuel Surcharge levy by
the Electricity Department, Puducherry, for the period from April to
October, 2010, consequent to the Order dated 25 September 2012, of the
Joint Electricity Regulatory Commission, for Goa and Union Territories.

2. (i) During the year, the Company received an order from the Income
Tax Department demanding Rs. 2,30,79,800/- for the Financial Year
2009-2010 challenging and disallowing the claim of membrane as a
deductible expenditure and the incurrence of the Sales Commission
expenditure.

(ii) In the aforesaid assessment order, Sales commission expenditure
amounting Rs.2,93,25,806/- was disallowed by the department as not
being genuine on account of preponderance of probabilities. The Company
contends that these are genuine and valid transactions, and that the
total amount which was actually paid to the Commission agents for the
services rendered was Rs. 2,66,03,358/- and the balance amounts were
paid towards quantity and other discounts provided to customers. The
Company strongly believes that the disallowance has been incorrectly
made by the Department based on certain assumptions on the method of
working of the Commission agents and the question of genuineness of the
aforesaid sales commission expenditure incurred by the Company is
beyond doubt and such tax claims are not tenable. Also refer para (iii)
below.

(iii) Accordingly, the Company has also filed an Appeal against this
order before the CIT (Appeals), Chennai, and based on the professional
advice obtained by it in the matter, the Company is hopeful of a
successful outcome of the Appeal. Hence, the net potential Income Tax
liability (including the relevant interest) of Rs.1,38,65,809/- on this
account, is disclosed under "Contingent Liabilities".

(iv) Further, as at 31 March 2013, an amount of Rs.75,00,000/- has been
paid by the Company against the above total disputed tax amount and
stay has been granted by the Department for the balance amount of
demand.

3. Cash Credit facilities are secured by exclusive first charge on
all current assets of the Company, exclusive first equitable mortgage
of factory land and building, second charge on the fixed assets of the
Company and pledge of other assets of the Company. The Company has not
utilised these Cash Credit facilities during the current period and in
the previous year.

4. Provision for current tax for the year has been determined based
on the total income of the company for the year ended 31 March 2013 and
in accordance with the Income Tax Act, 1961, duly considering the
deduction / exemption proposed to be claimed by the Company in the
Return of Income. Further the tax charge for the current year includes
an amount of Rs. 89,16,900/- (P.Y. 2,94,00,000/-) towards additional
provision made by the management based on the reassessment of certain
tax claims made in the past with respect to the ongoing assessments
based on various developments and on the grounds of prudence.

5. As on 31 March 2013, based on and to the extent of information
available with the Company regarding registration of suppliers as
Micro, Small and Medium Enterprises under the Micro, Small and Medium
Enterprises Development Act, 2006, there are no amounts outstanding in
respect of these vendors.

6. Employee Benefits

A. Defined Contribution Plans

The Company makes Provident Fund and Superannuation Fund contributions
which are defined contribution plans, for qualifying employees. Under
the Schemes, the Company is required to contribute a specified
percentage of the payroll costs to fund the benefits. The Company
recognised Rs. 41,53,553 (Year ended 31 March 2012 - Rs 36,63,463) for
Provident Fund contributions and Rs. 11,69,537 (Year ended 31 March
2012 Rs. 8,63,545) for Superannuation Fund contributions in the
Statement of Profit and Loss. The contributions payable to these plans
by the Company are at rates specified in the rules of the schemes.

B. The Company''s obligation towards the Gratuity Fund is a defined
benefit plan and is funded with Life Insurance Corporation of India.
The details of actuarial valuation as provided by the Independent
Actuary are given below:

7. Segment Information

The Company has identified business segments as its primary segment and
geographical segments as its secondary segment.

a) Primary segment reporting (by Business Segments)

Business segments are primarily Chlor Alkali segment and Other segment.

8. Operating Leases

The Company has taken on lease certain vehicles under non cancellable
operating lease agreements. The rental expense under such operating
leases was Rs.73,10,567 /- (Previous Year Rs.52,90,536/-). Future
minimum lease payments on non cancellable lease agreements as at 31
March 2013 are as follows:

General description of lease terms:

(i) Lease rentals are charged on the basis of agreed terms.

(ii) Vehicles are taken on lease over a period of 24 to 36 months.

9. Earnings Per Share

Net Profit for the year has been used as the numerator and number of
shares has been used as denominator for calculating the basic and
diluted earnings per share.

10. The Company has not used any derivative instruments to hedge its
foreign currency exposures. The details of foreign currency balances
which are not hedged as at the balance sheet date are as below:

11. During the year, pursuant to the approval of shareholders through
postal ballot, the Company has altered the object clause of the
Memorandum of Association to include the undertaking of trading
business in sugar and its allied products. However, as at 31 March
2013, no activity has been undertaken on this account.

12. Other Current Assets as at 31 March 2013, represents interest
accrued on fixed deposits placed with banks amounting to Rs.
14,95,227/- (P.Y Rs 10,50,101/-)

13. Previous year figures have been regrouped or reclassified wherever
necessary to conform to current years classification.

14. The Board of Directors has reviewed the realisable value of all
current assets of the Company and has confirmed that the value of such
assets in the ordinary course of business will not be less than the
value at which these are recognised in the financial statements.
Further, the Board, duly taking into account all the relevant
disclosures made, has approved these financial statements for the year
ended 31 March 2013 in its meeting held on 11 April 2013.

Mar 31, 2011

1. Excise Duty

Excise Duty on sales for the year has been disclosed as reduction from
the turnover. Excise duty relating to the difference between the
closing stock and opening stock has been included in Schedule 12
"Materials"

Amount / Rs.
31- March-2011 31-March-2010

2. Commitments

Estimated amount of contracts
remaining to be executed on
capital account and not provided
for in these accounts
(net of advances) 2,06,76,173 1,42,53,278

3. Contingent liabilities in
respect of

(a) Counter Guarantees to Banks
for guarantees given by the banks 4,63,90,326 6,11,36,000

(b) Guarantees given by the Company
to the customs department on behalf
of Teamco Hitech Engineering Limited 50,00,000 50,00,000

(c) Letters of credit 1,18,40,000 1,80,03,054

(d) Sales tax, Income tax and Excise
demands against which the Company has
filed appeals and for which no provision
is considered required as the Company
is hopeful of successful outcome in
the appeals. 1,03,37,354 3,06,23,177

4. Cash Credit facilities are secured by exclusive first charge on all
current assets of the Company exclusive first equitable mortgage of
factory land and building,second charge on the fixed assets of the
Company and pledge of other assets of the Company.

5. There was a minor Chlorine gas leak in the Chlor-alkali plant at
Puducherry on 26th January, 2011. The District Magistrate and
Puducherry Pollution Control Committee had ordered temporary closure of
the Plant operations until further orders and investigations. The
investigations by the concerned Government Authorities have been
completed and Orders are awaited. The Company has also filed a Writ
Petition before the Honble High Court of Madras, to issue directions
to the concerned authorities for permitting the Company to recommence
its operations. The Company is hopeful of a favourable outcome in this
matter and hence the financial statements have been prepared on a going
concern basis.

6. The Board of Directors, in their meeting held on 05/12/2010, have
approved the Scheme of Arrangement under Section 391 to 394 of the
Companies Act, 1956 to demerge the business and operations relating to
"Hollow Fibre Ultra Filtration Membranes, Packaged Drinking and Energy
Water, Health Shoppe" (Demerged Undertaking) of the Company into
Titanium Equipment and Anode Manufacturing Company Limited ("Resulting
Company") with effect from the 1st December, 2010 ("Appointed Date").
This scheme has been approved by the Shareholders, in their meeting
convened by the Honble High Court of Â¦ Madras, held on 31/1/2011 and
sanctioned by the Honble High Court of Madras vide its order dated
14/03/2011. The said Order has been filed with the Registrar of
Companies, Tamil Nadu on 26/03/2011 which is the effective date of the
scheme. In consideration for the above transfer, the Company has been
allotted 1,66,465, 6% Redeemable Cumulative Preference Shares of the
face value of Rs. 100 each at par in the capital of Resulting Company.
The demerger surplus of Rs.2,77,78,728 which represents the
consideration and excess of liabilities over assets transferred has
been disclosed as an exceptional item in the profit and loss account.

7. Related Party Disclosures - As identified by the management and
relied upon by the auditors

a) List of Related parties and description of relationship

(i) Parties with Significant influence

Teamco Hitech Engineering Limited

Titanium Equipment and Anode Manufacturing company Limited

Teamec Chlorates Limited

(ii) Key Management Personnel Dr.C.H.Krishnamurthi Rao

Relatives of above

Mr. Suresh Krishnamurthi Rao Mrs. K.M.Padma

8. The interest on fixed loan amounting to Rs.2,23,847 pertains to
the interest on term loan availed from Bank of Baroda by the demerged
undertaking for the period from 19th November 2010 to 30th November
2010. The loan has been taken over by the resulting company upon
demerger.

9. Repairs to Plant and Machinery include stores and spares consumed
amounting to Rs.2,61,56,660 (Rs.2,48,64,878/-)

10. Micro, Small and Medium Enterprises Development Act, 2006

In accordance with the Notification No. GSR 719 (E) dt 16.11.2007,
issued by the Ministry of Corporate Affairs, certain disclosures are
required to be made relating to Micro, Small and Medium Enterprises as
defined under the Micro, Small and Medium Development Act 2006. The
Company is in the process of compiling relevant information from its
suppliers about their coverage under the said Act. Since the relevant
information is still not available, no disclosures have been made in
the accounts.

11. The financial statements of the current year have been prepared
after considering the results of the Demerged Undertaking upto 30th
November, 2010. Hence the figures for the current year are not
comparable with those of the previous year.

Mar 31, 2010

1. Excise Duty

Excise Duty on sales for the year has been disclosed as reduction from
the turnover. Excise duty relating to the difference between the
closing stock and opening stock has been included in Schedule 13
"Materials"

2. The land of erstwhile Membrane Technologies Limited, is in the
process of being transferred in the name of the Company.

Amount / Rs.
31- March-2010 31-March-2009

3. Contingent liabilities
in respect of
(a) Counter Guarantees to Banks
for guarantees given by the banks 6,11,36,000 7,15,34,947

(b) Guarantees given by the Company
to the customs department on behalf
of Teamco Hitech Engineering Limited 50,00,000 50,00,000

(c) Letters of credit 1,80,03,054 5,15,72,788

(d) Sales tax, Income tax and Excise
demands against which the Company has
filed appeals and for which no
provision is considered required as
the Company is hopeful of successful
outcome in the appeals. 3,06,23,177 1,47,73,869

4 Closure of Chlorates Division during the year

The Chlorates Division of the company at Puducherry has been closed
with effect from 3rd June 2009. The cost and the net book value of the
fixed assets as on date of closure was Rs. 8,41,09,623 and Rs.
4,07,20,964 respectively. As this division does not represent a major
separate line of business or geographical area of operations, this has
not been considered as a discontinuing operation.

The management has evaluated the options of alternate use of fixed
assets at other Divisions of the company, disposal, except land and
building.

Consequent to such evaluation, assets amounting to Rs. 6,84,49,001 and
having a net book value of Rs.2,79,31,967 have been disposed and the
loss on such disposal amounting to Rs. 1,84,46,357 has been considered
in these accounts.

In respect of fixed assets transferred to other divisions amounting to
Rs.66,83,020 and having a net book value of Rs.39,52,162, the
management is of the view of that no impairment losses need to be
provided as they are capable of being put to alternate use.

The balance fixed assets amounting to Rs.19,73,928 and having a net
book value of Rs.3,67,397 have been classified as "held-for-sale" and
included in the respective category of assets in Schedule IV to the
financial statements.

5. During the year, the Company has obtained the approval of its
members for payment of remuneration by way of commission to its
Non-Executive Directors, at rates which are in excess of those
prescribed under Sec.309 of the Companies Act, 1956 and accordingly
provision at such higher rates amounting to Rs.1,05,55,974 have been
made in these accounts. The excess amount of Rs.71,73,963 is however
subject to the approval of the Central Government for which necessary
applications have been filed.

6. The fixed assets of water division of the company include certain
assets amounting to Rs.21,98,631 and having a net book value of Rs.
15,39,956 which have not been put to use. The management is evaluating
alternate use of these assets and is of the opinion that no impairment
losses need to be provided.

7. Segment Information

a) Primary segment reporting (by Business segments)

(i) The Company has considered business segment as the primary segment
for disclosure. These are:

Chlor Alkali division Chlorates division Others

8. Related Party Disclosures - As identified by the management and
relied upon by the auditors

a) List of Related parties and description of relationship

(i) Parties with Significant influence

Teamco Hitech Engineering Limited

Titanium Equipment and Anode Manufacturing company Limited

Teamec Chlorates Limited

(ii) Key Management Personnel Relatives of above

Dr.C.H.Krishnamurthi Rao Mr. Suresh Krishnamurthi Rao Mrs. K.M.Padma

9. Repairs to Plant and Machinery include stores and spares consumed
amounting to Rs.2,48,64,878/- (P.Y. Rs.4,35,82,830/-)

10. Micro, Small and Medium Enterprises Development Act, 2006

In accordance with the Notification No. GSR 719 ( E ) dt 16.11.2007 ,
issued by the Ministry of Corporate Affairs, certain disclosures are
required to be made relating to Micro, Small and Medium Enterprises as
defined under the Micro, Small and Medium Development Act 2006. The
Company is in the process of compiling relevant information from its
suppliers about their coverage under the said Act. Since the relevant
information is still not available, no disclosures have been made in
the accounts.

11. Shifting of Registered Office during the year

During the year, the Registered Office of the Company was shifted from
the Union Territory of Puducherry to State of Tamil Nadu after
obtaining necessary approvals.

12. Previous year figures are regrouped wherever necessary to conform
to current years classification.